News and Issues

Transit operations, the Cross County extension and the financial situation at Metro were all topics of discussion when Metro President Larry Salci addressed the CMT Board on Oct. 20.

Salci and Adella Jones, vice president of governmental affairs at Metro, gave a status report on the condition of the agency, the Cross County, and the future financial situation at Metro. Salci reported that the agency is in good shape now, but because the region has never adopted a policy for funding the operation of the system, the agency is facing a dire financial situation by FY08 without a new source of revenue. Salci, in his third full year at the agency, has a new management team in place with a focus on customer orientation.

Over the last three years, there have been several big changes that have helped to reduce overall operating costs at Metro. Metro has reduced absenteeism from 7700 to 2500 lost days and thus reduced overtime hours. Metro has aggressively monitored worker's compensation claims reducing costs by $4 million. A new safety program has helped reduce costs even further. Also, Metro is self-insured, which was costing the agency more than $7 million a year. Metro has aggressively challenged claims against the agency and has successfully reduced claims to $2.5 million a year. The Missouri Legislature has restored sovereign immunity to Metro which should further help hold down claims.

On the systems side, Salci indicated that performance is much better. All the buses have been overhauled. Five new transfer stations have been built. A reconfigured bus system will go into effect in Nov. 2005 that will eliminate duplication of service in some areas and increase service in other areas. On-time performance is up in all categories. One big issue facing the agency is the cost of diesel fuel which continues to rise. Metro put in place a fuel hedging program which has allowed them to save almost $5 million over the last 15 months in realized and unrealized gains. Salci said that the fuel costs will continue to be a problem as he does not see them going down. Salci said that the actual subsidy per passenger has gone down for the first time in the history of the agency to $2.69 per passenger.

He then covered the financial situation of the agency. The bulk of the funding is primarily federal and local funding. Seventy percent of the budget goes to wages and benefits, and the only place left to cut in his opinion is operations. The bus and Call-A-Ride system make up 76 percent of the costs of the system, but the region has also spent more than $1.4 billion in investment in rail over the last 15 years. If he has to cut service, it will be a 10 to 1 cut - bus to MetroLink. Salci believes these cuts would devastate the system.

With regards to the Cross County project, the project is on track to beat its scheduled opening of Oct. 31, 2006. Several facilities contracts are wrapped up or will wrap up in the next several months. Only a few will extend into the first quarter of next year. LK Comstock is working around the clock to install the track, wire, and electricity. Originally they had a 30 month contract which has been reduced to 14 months. Metro will be opening the Forest Park Parkway in segments.

With all that being said, Salci reported that the financial situation of the agency does not look good. Metro has a balanced budget for FY06, but in FY07 Metro is facing a $5 million deficit which jumps to $28 million the following fiscal year. The deficit jumps in FY08 due to GASB 45 requirements which add a cost of $11 million and then fully adding in the cost of operating the Cross County extension in FY08. He said that the biggest problem is that the fundamental policy of funding transit in the region has not changed. No one has ever dealt with the operating deficits. Currently what Metro receives from the State of Missouri is a wash after paying the motor fuel tax and paying the State $350,000 a year to monitor the operations at Metro. On the other hand, Illinois pays $60 per person for transit investment in contrast to Missouri at $1.16 per person. The FY08 budget has to be balanced by April 2007. Without a new source of revenue, cuts would be devastating to the system. A new quarter-cent would raise $46 million annually in new revenue - $16 million for maintenance, $10 for bond repayment, and $5 million for inflation leaves $15 million in new money. This is not enough to expand the system.

Salci said that the majority of new projects funded at the federal level have a 50:50 match - 50 at the local level and 50 at the federal level. This is why an additional ½ cent tax sooner than later is imperative to keep the system operating and expanding.

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